Projects Funded for Katrina Jessoe
Managing Agricultural Water Use for Sustainable Groundwater in California
- Katrina Jessoe
- Richard Sexton
Specific Objectives of the Project
California’s Sustainable Groundwater Management Act (SGMA) requires local management of groundwater throughout the state. To inform water policy, this project sought to identify the impacts of groundwater restrictions on irrigated agriculture and evaluate the effectiveness of economic instruments for management. We used well-level panel data on groundwater extraction and prices from a basin in Southern California to estimate a price elasticity of demand for groundwater. Our objective was to compare welfare across policy instruments with a model that reflects the institutional realities of agriculture in California.
Project Report/Summary of Results
With the passing of SGMA, groundwater management is at the forefront of water policy debates in California. Since groundwater management will have impacts on agriculture, attention must be given to the choice of policy instrument. Our research quantifies the efficiency gains from using market-based instruments relative to command and control to manage groundwater.
A theoretical model of a groundwater market was developed to show how the magnitude and distribution of the gains from trade change as market structure varies. Market structure is a key consideration because future groundwater markets will likely be spatially isolated and the concentration of permits among a handful of buyers and sellers is likely. The exercise of market power may be a defining component of these markets due to the presence of large grower-shippers, the formation of coalitions among buyers or sellers, and/or competition among a few water agencies on a shared basin.
We find that the gains from markets are large, despite potential losses from market power. Economic surplus with trade can be over two times greater than that under command and control. The price elasticity parameter used to calibrate the model was generated with well-level panel data on groundwater extraction and prices from the Coachella Valley, CA. Simulations that vary market conditions show that results generalize to other groundwater basins.
Dynamics of Mexico-to-U.S. Migration, Climate Change, and the Farm Labor Supply
- J. Edward Taylor
- Katrina Jessoe
To uncover long-term trends in the farm labor supply from rural Mexico and their implications for California farms and rural communities. This project has two components. The first is to continue our work “unpacking” a negative trend in the farm labor supply, which we identified using panel econometric methods with support from a Giannini Minigrant in 2013-14, and explore the implications for specific California crops, by integrating labor into a detailed crop production model. We will estimate the relative contributions of developments in Mexico, including the expansion of rural education and nonfarm economic growth; US border enforcement; drug-related violence along the US-Mexico border; and sector- and location-specific migration networks in explaining the significant decline in rural Mexicans’ probability of doing farm work. We will simulate the implications of this decreasing farm labor supply on specific crops (in collaboration with Richard Howitt and Josue Medellin). The second component (with Katrina Jessoe) will expand work initiated in 2013 on the impacts of weather shocks on labor allocations in rural Mexico, including migration to the US. Our early findings already have been presented at several conferences and workshops. They indicate that an increase in harmful degree days in rural Mexico, particularly at the start of the maize-growing season, negatively impacts both farm and nonfarm employment and increases emigration pressures. Both components will be the basis for constructing long-term projections of changes in the supply of farm labor to Mexican and US farms, the implications for California agriculture, and the role of immigration policy in an era of less abundant farm labor.
Summary of Results
Charlton (2014) and Charlton and Taylor (2015). They were presented at the UC Davis “Frontiers of Immigration International Conference” on January 22, 2015, and they appeared in The Wall Street Journal the following day. They also have been presented to grower and farm labor conferences, including the 2015 Oregon Wine Symposium, the Harvard University Farm Labor Challenges conference (November 2014), the “Farm Labor and the ALRA at 40” conference (2015), and the Banco de Mexico (2014).
In a related study (Jessoe, Manning, and Taylor), we find evidence that rural Mexicans are less likely to work locally in years with a high occurrence of extreme heat. This reduction is largely due to a decline in non-farm labor and wage work. Extreme heat increases migration within Mexico from rural to urban areas, particularly at the height of the growing season, and international migration to the U.S. Findings from this study were presented at the Agricultural & Applied Economics Association’s 2014 AAEA Annual Meeting in Minneapolis, and the Fifth World Congress of Environmental and Resource Economists.
The Safe Drinking Water Act and Water Quality: The Case of Nitrate Contamination in the Salinas Valley and Tulare Lake Basin
- Katrina Jessoe
Price and Non-price Instruments for Water Conservation in California
- Katrina Jessoe
This research focused on three water pricing policies introduced by the city of Davis between 1996 and 2006: a switch from a uniform to an increasing block pricing structure; the introduction of a second block for single family residential households; and a change in the sewer rate structure. Our results indicate that each policy led to water conservation and suggest that a doubling of prices would on average reduce consumption by 12%.